Mark Dancer, CEO of the Network for Channel Innovation, has spent more than a year working as lead researcher on the National Association of Wholesaler-Distributors’ next edition of its Facing the Forces of Change report. This summer, he spoke to attendees at MDM’s Digital Distributor Summit on strategic thinking in disruptive, non-linear markets. There are two questions to answer, he said, on where distributors go from here: “What?” And, “How?” 

To answer those questions, Dancer didn’t waste any time addressing the 800-pound gorilla in the room: “We’re not going to win by being Amazon,” he said. “We’re going to win by being notAmazon. But what is that?” 

A diversity of business models will emerge for distributors who have to decide what they will become. The way to get there is through innovation, he said. The concept of innovation is a process and skill held by entrepreneurs and organizational leaders — but can be unfamiliar to distributors, Dancer said.  

There are about 350,000 distributors in the U.S. ranging in size from very small to very large. Distributors should ask themselves how to turn that 350,000 from a weakness in competing with the scale of Amazon and other disruptors into a strength. Part of that effort comes from getting everyone engaged in the conversation about the “what” and the “how.” “We need to be incubators of innovation,” Dancer said. That is his goal for the upcoming 12th edition of Facing the Forces of Change, out later this year, to connect the dots between the forces of change and innovation, turning them from threats to opportunities.  

Action Through Organization

There are a large number of forces of change and innovation that are specifically relevant to distributors, Dancer said. However, the sheer size makes them unmanageable. A manager with a 50-item long to-do list would fail, he pointed out. With that in mind, he organized them into three categories: technology, human and commerce. For example, commerce forces of change include agility, how a business is run, building a culture of innovation. Human forces of change ask what we do with our people, our physical spaces, to be forward-looking and innovative. Categorizing the three forces begins to point the way toward a solution, Dancer said.

Because the mind subconsciously screens out ideas that are not familiar, distributors can begin to consciously building their organization in a way so that the company itself is oriented around considering those things that are not familiar. 

The best business innovations leverage multiple forces of change, Dancer said. A distributor implementing a new e-commerce platform should be able to espouse the benefits of the technology but also speak to how it ties to human-centric innovation and the way businesses are run. “That’s called storytelling,” he said. “It’s a skill for leaders. By telling your story, you develop foresight. You build your brand. You help your company and your people transition from today to tomorrow.”

So, how does a distributor get to innovation? Dancer draws a bright line between continuous improvement and innovation. “Continuous improvement is essential for distributors,” he said. “We know how to do that.” But, he added, that line is bright for a reason — it can become a blind spot. Getting really, really good at what you already do can lead to breakthrough ideas, but it’s not guaranteed. 

Getting Ahead

Business innovation, doing things differently in both big and small ways, is a discipline. Dancer researched innovation and found those who are focused on product or technology innovation have access to an existing mountain of knowledge. But there’s not much out there geared toward distributors, who have a business model unique from manufacturers or technology companies. Distributors need their own way of best practices and innovation that is specifically for them and draws on who they are, he said. “Distributors must seek not just to catch up but to get ahead,” Dancer said. “This is an important mindset for distributor leaders.”

A basic premise of innovation is to think wide before you can think narrow. What can your business become? Dancer has been following innovation forums online, attending innovation events outside of distribution for a variety of professions and verticals. Everyone is asking what they become in the digital age — and they are all distribution customers. “There is not an organization that doesn’t count on a distributor for something,” he said. “We can help ourselves by helping our customers. By tapping into their conversations.”

Dancer asked businesses that buy from distributors what role those distributors can play in the innovation process. Their response: “What’s a distributor?” Distributors need to have a presence in the conversation that customers are having about innovation, he said, and be there for them with credible solutions. “If you help the businesses you serve transition to the future, you can help yourself,” Dancer explained. 

Practitioners of innovation have a growing awareness that they have allowed the terms “disruption” and “innovation” to be synonymous, as if disruption is the only way to innovate. However, a counter-movement is developing around “non-disruptive innovation.” Rather than — as a lot of technology companies do — build something because you can and then force it on the industry, distribution industry insiders have the opportunity to address big challenges for the stakeholders in the field that no one is currently thinking about. “That’s a big conversation for us,” Dancer said. “It’s going to take a long time. It might take years. But can we come up with a … powerful idea on our own? We need that. We should aim high.” 

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